Power ministry’s game-changer

In a complete turn of events, the ministry of power is pushing for sale of gas to state-owned NTPC Ltd from Mukesh Ambani’s RIL at $2.34 (Rs 107) per unit — without waiting for the outcome of the pending NTPC suit in the Bombay High Court.

In a complete turn of events, the ministry of power is pushing for sale of gas to state-owned NTPC Ltd from Mukesh Ambani’s Reliance Industries Ltd (RIL) at $2.34 (Rs 107) per unit — without waiting for the outcome of the pending NTPC suit in the Bombay High Court.

“I request the ministry of petroleum and natural gas to place before the EGOM (empowered group of ministers) the proposal for allocation of 12 million standard cubic meters of gas per day (mmscmd) at the discovered price of $2.34 per unit as early as possible and without waiting for the outcome of the pending NTPC suit in the Bombay High Court,” power secretary H.S. Brahma stated in his January 4 letter to petroleum secretary R.S. Pandey.

The stand by the power ministry assumes significance and could prove to be a game changer in the ongoing gas dispute between the Ambani brothers in Supreme Court, as well as between NTPC and RIL in Bombay High Court.

RIL has so far maintained that it cannot sell gas to NTPC or any other consumer at a price which is lower than the government-determined price of $4.20 (Rs 192) per unit and would need government’s approval for selling gas to NTPC at $2.34 per unit. If the government as the owner of this gas agrees to this proposal, it will impact RIL’s revenue stream from sales of this gas by an estimated Rs 20,000 crore over the 17-year lifespan of the field.

The power ministry’s stance comes barely weeks before the Supreme Court delivers a judgement on a similar pricing dispute between Mukesh and Anil Ambani.

All the three affected companies — NTPC, RIL and RNRL — refused to comment.

Brahma buttressed his argument by citing the December 1, 2009 government affidavit in Ambani brothers’ case in the Supreme Court: “The rights of NTPC and RIL cannot be regarded as similar in status to private arrangement as in case of RIL and RNRL.”

Brahma said that subsequent to filing of the affidavit by the government, the issue of gas supply to NTPC at $2.34 per unit and without waiting for the outcome of the Bombay High Court decision, was also discussed at the December 5 meeting of the ministries of power and petroleum with the Solicitor General of India.